Ac­cel­er­at­ing growth raises In­done­sian hopes of turn­around

The Myanmar Times - - International Business -

IN­DONE­SIA's econ­omy grew more than ex­pected in April-June thanks to a boost in con­sumer spend­ing dur­ing Ra­madan and surg­ing state spend­ing.

While the re­sult is below the gov­ern­ment an­nual tar­get, an­a­lysts said it could in­di­cate that South­east Asia’s big­gest econ­omy may fi­nally be pulling out of a long slow­down.

The 5.18 per­cent on-year ex­pan­sion beat fore­casts of around 5pc and was also up on the pre­vi­ous quar­ter's 4.92pc.

Fu­elling the jump was a pick-up in man­u­fac­tur­ing ac­tiv­ity and a surge in con­sumer de­mand dur­ing the Is­lamic holy month.

Con­sumers in the world's most pop­u­lous Mus­lim-ma­jor­ity coun­try typ­i­cally splash out on ex­pen­sive foods and clothes dur­ing the Ra­madan fes­ti­val.

Pres­i­dent Joko Wi­dodo, known as Jokowi, was elected two years ago on a pledge to boost the econ­omy and has taken a se­ries of steps to help the ail­ing G20 na­tion.

April-June saw a 36pc jump in gov­ern­ment spend­ing from the pre­vi­ous quar­ter, while he has also pushed a ma­jor in­fra­struc­ture pro­gram and launched a tax amnesty aimed at lur­ing back to the coun­try bil­lions of dol­lars of un­de­clared in­come.

The cen­tral bank in June cut in­ter­est rates for a fourth time this year in a bid to stim­u­late growth.

“The out­look for In­done­sia’s econ­omy has im­proved in re­cent months, rais­ing hopes that the econ­omy could be on the cusp of a sus­tained re­cov­ery,” said Gareth Leather of Cap­i­tal Eco­nom­ics.

Growth in the re­source-rich na­tion has been slip­ping in re­cent years due mainly to a slow­down in de­mand for its key com­mod­ity ex­ports – such as coal and pre­cious met­als – par­tic­u­larly from Asian pow­er­house China.

How­ever growth is still well below Mr Jokowi's an­nual tar­get of 7pc and Mr Leather urged more ac­tion to build on re­cent mea­sures aimed at at­tract­ing more over­seas in­vest­ment.

“Although re­cent steps to open up the econ­omy to foreign com­pe­ti­tion are wel­come, In­done­sia still has a long way to go to turn around one of the most pro­tec­tion­ist busi­ness en­vi­ron­ments in the re­gion,” he said.

Cap­i­tal Eco­nom­ics fore­cast In­done­sia's econ­omy would grow around 5pc this year and next. –

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